What Is a Garnishment Fee and Who Pays It?

Garnishment is a legal process that allows a creditor to collect unpaid debts by directing a third party to withhold funds from a debtor. This often involves an employer deducting money from wages or a bank freezing funds in an account. The process is typically initiated after a court issues a judgment, though some government agencies can garnish without one.

A garnishment fee represents an additional cost associated with this debt collection mechanism. These fees are incurred to cover the administrative and legal expenses involved in processing and implementing a garnishment order.

Components of a Garnishment Fee

Garnishment fees originate from several parties involved in the process. Courts frequently impose fees for filing the necessary legal documents and for processing the garnishment order itself. This includes costs related to preparing and serving legal documents, such as a writ of garnishment, which formally instructs the third party to withhold funds.

Creditors may also incur fees, particularly if they engage legal professionals to manage the garnishment process. Attorney fees can be a significant component, especially in complex cases, and these costs may be added to the total debt. The garnishee, which is the third party holding the debtor’s funds—such as an employer for wage garnishments or a bank for account garnishments—often incurs administrative costs. These administrative fees compensate the garnishee for the labor and resources required to process deductions, manage records, and disburse the garnished funds as instructed by the court order.

For instance, an employer must adjust payroll systems to deduct specific amounts from an employee’s wages, track the total collected, and ensure timely remittance to the appropriate entity. Similarly, banks must freeze accounts, verify balances, and manage the transfer of funds. These operational expenses, while seemingly minor per transaction, accumulate and are recognized as legitimate costs within the garnishment framework.

Calculation and Responsibility for Garnishment Fees

The calculation of garnishment fees varies, often dictated by state and federal regulations, and can take several forms. Some jurisdictions might impose a fixed fee for processing each garnishment order, while others may allow a percentage of the garnished amount to be charged. It is also possible for fees to combine both a fixed charge and a percentage, depending on the specific type of garnishment and the entity imposing the fee.

The responsibility for bearing these fees typically falls on the debtor, as the fees are generally added to the total outstanding debt. While the creditor might initially pay certain court filing fees or attorney costs to initiate the garnishment, legal provisions often allow these expenses to be passed on to the debtor, increasing the amount they owe. For example, some states allow garnishees, such as employers, to deduct a small administrative fee from the employee’s disposable earnings, usually a few dollars per payment or a small percentage of the amount withheld.

Statutory limits are commonly in place to prevent excessive charges and protect debtors. Federal and state laws often cap the total amount that can be garnished from wages, which indirectly limits how much can be added through fees. For instance, federal law generally restricts wage garnishments to 25% of an individual’s disposable earnings or the amount by which their weekly disposable earnings exceed 30 times the federal minimum wage, whichever is less.

The Process of Fee Collection

Once a garnishment order is legally established and the primary debt amount, including any accrued interest, is determined, the collection of garnishment fees commences. The specific mechanics of how these fees are collected depend on the type of garnishment.

For wage garnishments, the employer, acting as the garnishee, is responsible for deducting the specified amount, which includes the garnishment fee, directly from the employee’s paycheck. This deduction happens before the net pay is disbursed to the employee.

Similarly, in the case of bank account garnishments, the financial institution holding the debtor’s funds will freeze the account up to the garnished amount, which encompasses the original debt and any associated fees. The bank then processes the transfer of these funds as instructed by the court order. The collected fees are then disbursed to the appropriate parties involved in the garnishment process.

For instance, administrative fees retained by the garnishee for their processing efforts are typically kept by the employer or bank from the garnished funds. Court fees, initially paid by the creditor, are often recouped from the garnished amount and remitted to the court system. Any permissible attorney fees are also disbursed to the creditor or their legal representative from the collected funds.